On The Fundamental Breach Of CISG And Its Succession In China 's Contract Law

Fundamental breach derived from case law of Britain, it partitionednonperformance based on the severity of the consequence of the breach. Britishcourts distinguished contract terms into condition terms and warranty terms, thenon-breaching party could avoid the contract when the other party violate conditionterms, and could not avoid the contract but only claim compensation for damageswhen the other party violate warranty terms. Later, British courts create intermediateterms in practice as supplement of condition terms and warranty terms, whether thenon-breaching party could avoid the contract depends on the nature of the defaultand its severity. The judgment of fundamental breach in England depends on fromthe type of the terms of the contract to the nature of the default and its severity.Fundamental breach in civil law system represents the institution of dissolution ofthe contract, civil law countries such as French, Germany and Italy put severity ofthe default as precondition for dissolution of the contract. The United nationsconvention on contracts for the international sales of goods(hereafter, TheConvention) defined fundamental breach based on the absorb of the reasonablecomponents from the two law systems, formed with article25as the core of defaultrelief system. Fundamental breach on one hand gives the rights of the parties toavoid the contract, on the other hand limits the rescission of contract. In addition,fundamental breach affects the passing of risk and the effectiveness of exceptionclause.The Convention affects contract law of our country positively. In the legal relief system of the contract,Contract law inherited and accepted fundamental breach ofThe convention, incorporated objective criterion on determination of fundamentalbreach, put severity of the consequence of default as precondition of dissolution ofthe contract, and abandon subjective criterion which considers the foreseeability ofthe breaching party, reduce the uncertainty caused by the subjective criterion.Theoretical cycle has different opinions on the determination of fundamentalbreach,the author agrees with the compromise theory more, which takes the severityof the consequence of the default as the main criterion, along with the type ofviolation of obligation. There are situations in which the non-breaching party coulddissolute the contract in paragraphs2to4of article94of the contract, paragraph4ofarticle94,which stipulates “if delay of performance or any other nonperformance byone party result in irrealizable of the purpose of the contract, the aggrieved partycould dissolute the contract”, is believed by most scholars as the direct embodimentof fundamental breach of contract law. The understanding of the purpose of thecontract becomes the key to judge fundamental breach. The purpose of the contractin the contract law corresponds to “what he is entitled to expect under the contract”under article25of the convention, the understanding of the purpose of the contractby our scholars undergoes the process of development from narrow to wide, andgradually consists with the convention, that is,the purpose of the contract is theinterest,the rights, the things,the results or the status which the parties expect tohave or enjoy. Different understanding of the purpose of the contract affect whetheror not fundamental breach could be formed. The purpose of the contract is theobjective interest the contract itself reflects, it does not change with the subjectiveintention of the parties. The judgment of fundamental breach in one case is usuallydifferent from the other case, even on the same case, different judges may givedifferent answers on whether fundamental breach is constituted. Some judgmentsabout fundamental breach were unconvincing. The judges, as the explorers of thecontract, should take the contract terms, negotiations between the parties, businesspractice, the possibility of repair after default into consideration as well as follow theprinciple of encouraging trade in order to determine the fundamental breach appropriately.The system of legal rescission of contract in the contract law of our countryabsorbed reasonable components from the system of fundamental breach in theconvention and is high level of legislation with modern law spirit. However, thesystem of legal rescission of contract has some defects as follows: There areconfusions between implied anticipatory breach of contract and unsafe right ofdefense; the criterion of fundamental breach is too abstract and simple; the unifiedmodel of right of cancellation lead to illogical in the whole system of legal rescission.The author suggests that establish complete system of implied anticipatory breach ofcontract instead of system of unsafe right of defense; definite the purpose of thecontract in general, meanwhile add specific considerations to help determine theconstitution of fundamental breach, as well as set out transparency provisions inorder to ensure the flexibility of the application of law; establish the dual structure ofrescission and termination of the contract.